Between tonnage and thresholds: assessing South Africa's maritime limitation regime

Patrick Holloway[*]

Webber Wentzel, Cape Town

patrick.holloway@webberwentzel.com  

Lereshin Naicker

Webber Wentzel, Cape Town

lereshin.naicker@webberwentzel.com  

Introduction

In the modern era of maritime commerce, the doctrine of limitation of liability remains a cornerstone of shipping law. It reflects a pragmatic compromise between the interests of shipowners and claimants, seeking to balance commercial risk, ensure insurability and encourage trade. Historically rooted in common law, limitation regimes have since evolved through multilateral conventions to provide uniform, predictable mechanisms that govern the financial exposure of maritime actors.

As shipping operations have become more complex, the international legal community has responded with increasingly structured instruments, culminating in the widely adopted 1976 London Convention on Limitation of Liability for Maritime Claims and its 1996 Protocol (the 'LLMC'), which introduced revised thresholds based on special drawing rights (SDRs).

South Africa, however, presently retains an older formulation of limitation law. Its statutory framework is codified in section 261 of the Merchant Shipping Act 57 of 1951 (the 'MSA'), which closely mirrors the structure and substance of the International Convention Relating to the Limitation of the Liability of Owners of Sea-Going Ships, (the '1957 Brussels Convention'). Under this framework, the right to limit is not absolute. Rather, it may be excluded where loss or damage is shown to have occurred with the actual fault or privity of the shipowner.

This article explores South Africa's limitation regime in its doctrinal and comparative dimensions, focusing on the three categories of claims recognised in terms of section 261 of the MSA, the legal test for breaking limitation and the prevailing strategic defences adopted in local litigation. In doing so, it situates South African law within the broader context of international maritime limitation frameworks, while noting areas of divergence (particularly the continued use of a tonnage-based calculation) and ongoing relevance to practitioners engaged in cross-border shipping disputes.

Overview of the two key conventions on limitation of liability

The modern law of limitation of liability for maritime claims is shaped by two principal international instruments: the 1957 Brussels Convention and the LLMC. Each reflects a distinct phase in the development of global consensus on the balance between claimants' rights and the protection of maritime commerce.

The 1957 Brussels Convention established a limitation regime that permitted shipowners to limit liability for certain maritime claims, unless the loss was caused by their actual fault or privity. It calculated limits by reference to the tonnage of the vessel and made limitation contingent upon the claimant proving that the owner had personal knowledge or involvement in the causative event. This Convention has been the point of departure for many jurisdictions, including South Africa, which has incorporated its framework into domestic law through section 261 of the MSA.

The LLMC was introduced to resolve perceived inadequacies in the earlier regime. The principal reforms were twofold: first, the adoption of significantly higher limits of liability, and second, the introduction of an almost unbreakable right to limit. Under the LLMC, limitation may only be excluded where it is proven that the loss resulted from the shipowner's personal act or omission, committed recklessly and with knowledge that such a loss would probably result. This elevated the fault threshold substantially above the 1957 Brussel Convention standard. The LLMC also displaced the value-based model in favour of fixed tonnage bands (by adopting prescribed tonnage bands denominated in SDRs) to determine monetary caps.

While a number of major maritime jurisdictions have adopted the LLMC, South Africa remains aligned with the 1957 Brussels Convention and has not acceded to the LLMC. This creates a divergence between South Africa's limitation regime and the prevailing international position, both in respect of the applicable fault standard and the manner in which liability caps are calculated. The implications of this divergence become clearer when examining the detailed structure of section 261 of the MSA.

The South African position: section 261 of the MSA

Section 2 of the South African Admiralty Jurisdiction Regulation Act, 1983 ('AJRA') grants the High Court of South Africa jurisdiction over claims to limit liability. AJRA includes claims for limitation of liability under the definition of 'maritime claims'. Section 1 (1) (w) includes 'the limitation of liability of the owner of a ship or of any other person entitled to any similar limitation of liability' under the definition of 'maritime claim'.

Section 261(1) of the MSA creates a framework for limitation of liability that applies when loss of life, personal injury or damage to property or rights arises without the actual fault or privity of the owner.

For the purposes of these limitation provisions, the definition of 'owner' shall include any charterer; any person interested in or in possession of such ship; and a manager or operator of such ship.

The current provision contemplates three discrete categories of maritime claims, each subject to a distinct financial ceiling determined with reference to the ship's gross tonnage and is expressed in SDRs. The use of SDRs as the applicable unit of account was formally introduced into South African law on 1 September 1997 via the Shipping General Amendment Act 23 of 1997. Prior to this legislative shift, the regime operated on the basis of gold francs, in line with the 1957 Brussels Convention.

Categories of claims recognised

Section 261(1) distinguishes three categories of claim:

1. first, where the claims only relate to loss of life or personal injury, the shipowner's liability is capped at 206.67 SDRs per ton of the vessel's gross tonnage;
2. second, where the claims pertain solely to loss of or damage to property or rights, the applicable cap is lower, at 66.67 SDRs per ton; and
3. third, where claims are made for both personal injury/loss of life and property damage, the overall cap remains 206.67 SDRs per ton, but with a specific priority structure. In such claims, the first 140 SDRs per ton are reserved exclusively for personal injury or loss of life claims and the remaining 66.67 SDRs per ton are shared pari passu (on equal footing) between any remaining personal injury claims, and all property claims.

This statutory approach embeds an inherent hierarchy of interests, favouring personal injury and loss of life over property damage. The South African formulation tracks the structure of the 1957 Convention and predates the modern sliding-scale models of the LLMC, which provides for progressively higher limits depending on the nature and volume of claims.

Unlike the LLMC, which imposes a high threshold for breaking limitation (ie, reckless conduct with knowledge of probable loss), section 261 of the MSA adheres to the lower 'actual fault or privity' test. This standard is applied by South African courts when determining whether a shipowner or carrier may limit their liability. It focuses on whether the shipowner had personal knowledge of the act or omission giving rise to the claim, and whether they were in a position to prevent or control the relevant conduct.

Two interpretative issues commonly arise in the application of the 'actual fault or privity' standard within South African limitation law. The first concerns attribution: namely, whose acts or omissions may properly be regarded as those of the shipowner. This is particularly pertinent in the context of modern corporate shipping structures, where operational control is often exercised by directors, managers or shore-based superintendents. The second relates to the requisite degree of personal involvement, specifically, whether liability can attach in circumstances where the shipowner has delegated day-to-day management to others, and what threshold of oversight or knowledge must exist for the limitation right to be excluded under section 261.

South African courts have provided authoritative guidance on the scope and application of the 'actual fault or privity' standard. In St Padarn v Atlantic Harvesters [1986] (4) SA 875 (C), the Cape Provincial Division of the High Court confirmed that culpability is not confined to directors or top-tier executives of a shipowning entity. Rather, the requisite fault or privity may be established through the acts or omissions of individuals occupying lower tiers of operational management, provided that their conduct can be attributed to the owner and is causally linked to the loss. Importantly, the judgment affirmed that the fault contemplated by section 261 includes negligence, provided such negligence materially contributed to the damage.

Local jurisprudence has drawn on English authority, including The Lady Gwendolen, in articulating the expectations placed on shipowners to exercise effective oversight over their vessel's day-to-day operations. The threshold for exoneration has accordingly become more exacting, with courts increasingly scrutinising whether adequate systems of supervision and control were in place before accepting the absence of personal fault or privity.

It is also important to note that section 261 does not extend to incidents involving wreck removal or oil pollution. These categories of liability are addressed through distinct legislative instruments. The removal of wrecks falls within the ambit of the Wreck and Salvage Act 94 of 1996, which gives effect to the International Convention on Salvage, 1989. Oil pollution liability, by contrast, is governed by the Marine Pollution (Control and Civil Liability) Act 6 of 1981. Unlike the LLMC, the MSA does not contain an enumerated list of excluded claims or categories of liability to which limitation does not apply.

Further, given prevailing exchange rates and the use of SDRs as the applicable unit of account, the quantum of the limitation fund under South African law is, in practice, considerably lower than in jurisdictions that have adopted the LLMC. This disparity renders South Africa a comparatively favourable forum for shipowners and other liable parties, provided they succeed in discharging the onus of establishing the absence of actual fault or privity as required by section 261 of the MSA.

Notably, South African law does not codify a detailed statutory mechanism for the constitution of a limitation fund, in contrast to the more developed procedural frameworks under English law. While section 261 of the Merchant Shipping Act provides the substantive right to limit liability, the Admiralty Jurisdiction Regulation Act contains no specific provisions governing the procedural steps for establishing a fund. In practice, it is accepted that a party seeking to limit liability must institute a limitation action in the admiralty court, typically by way of summons seeking a declaratory order confirming the right to limit. This action may be accompanied by an offer of approved security to constitute the fund. Although the procedural foundation for this approach is not expressly prescribed in South African legislation, it reflects a pragmatic alignment with English admiralty practice.

Carriage of Goods by Sea Act 1 of 1986

In addition to the general limitation provisions under the MSA, South African law provides for package limitation through the Carriage of Goods by Sea Act 1 of 1986 ('COGSA'). Although South Africa is not a signatory to the Hague–Visby Rules, COGSA incorporates those Rules into domestic law and provides for their application in the following scenarios:

• where the port of shipment is in South Africa;
• where the bill of lading explicitly incorporates the Rules;
• where a non-negotiable receipt so stipulates; and
• where the contract extends to live animals or deck cargo under a bill or receipt governed by the Rules.

Where the Hague–Visby Rules apply in South African proceedings, the Article 4 (5) limitation regime governs. This extends the right to limit liability to the carrier's servants and agents, and has formed the basis for the enforcement of Himalaya Clauses, which confer the benefit of exclusion or limitation clauses on third parties. South African courts have upheld such clauses, notably in The Tigr No 1 1995 (4) SA 49 (C), even where the contract may fall outside the scope of COGSA and the Rules.

Further, South African law permits contractual clauses that limit or exclude liability, provided such terms are expressly incorporated into the agreement. Exclusion clauses extending to negligence are generally enforceable, unless they purport to cover gross negligence, which courts are reluctant to uphold. As such, a shipowner or carrier may, notwithstanding actual fault in terms of the MSA or COGSA, avoid liability altogether if a valid exemption clause is in place and has been properly relied upon.

The proposed reform: section 271 of the merchant shipping bill and the envisaged modernisation of South African limitation law

The Merchant Shipping Bill (B 12‑2023) (the 'Bill') represents an arguably long-overdue overhaul of South Africa's maritime liability regime. At its core is the proposed repeal of the outdated section 261 of the MSA to be replaced by section 271, an entirely revised limitation provision that mirrors the structure and substance of the LLMC.

This legislative shift marks a decisive departure from the obsolete Brussels framework of 1957, which no longer reflects the commercial realities or risk environment of modern shipping. By adopting an international standard that has become the global benchmark, the Bill signals South Africa's intention to solidify its position as a serious maritime jurisdiction, aligned with international norms that are more commercially predictable, and no longer encumbered by anachronistic liability thresholds and fault standards that incentivise forum shopping and regulatory arbitrage.

Section 271 introduces a three-tiered limitation scale based on gross tonnage and expressed in SDRs. The figures and structure are materially identical to those set out in Article 6 of the LLMC.

The proposed formulation dispenses with the crude SDR-per-ton ratio under the current section 261 (ie, 66.67 SDRs for property and 206.67 SDRs for life claims) and instead adopts a progressive and proportionate scale that better accounts for vessel size and relative risk exposure.

The transition from the common law standard of 'actual fault or privity' to the LLMC threshold of 'recklessness with knowledge' (as codified in the Bill) marks a significant narrowing of the circumstances in which limitation may be broken. This reflects international consensus that limitation should be virtually unbreakable save for egregious conduct. The burden of proof now lies squarely with the claimant, and South African courts are likely to follow a restrictive interpretation. In practical terms, this change may substantially reduce the scope for successful 'breaking limitation' arguments in South African proceedings, enhancing legal certainty and improving insurability for shipowners.

The proposed enactment of section 271 will bring South Africa into functional alignment with jurisdictions that have adopted the LLMC. It will enhance legal certainty for insurers, P&I Clubs, and operators active in South African waters, while promoting consistency across related liability regimes.

As it stands, the Bill remains under active consideration by South Africa's Parliament Portfolio Committee on Transport. The Bill underwent public consultation phases, with the process reopening as recently as April 2025, to solicit additional stakeholder input. Industry concerns, particularly from the freight and logistics sectors, have focused on potential unintended consequences, such as elevated compliance costs and procedural complexity, especially in relation to cabotage and limitation regimes. At the time of writing, no final report has been released, but the Committee was expected to reach a decision on the Bill's parliamentary progress by 10 July 2025.

Should the Bill advance, South Africa would formally transition its limitation regime into functional alignment with the LLMC, arguably modernising its maritime legal landscape and enhancing jurisdictional compatibility with major trading partners.

Note